Fri, Jan. 30, 11:26 AM
- Pump prices may have dropped below $2/gal in many parts of the U.S., but investors are starting to notice losses from energy companies in their portfolios to the tune of $393B since June, according to a Bloomberg analysis.
- The losses sometimes show up in indirect ways, via investment funds, retirement accounts and bank balance sheets.
- The article cites the example of Energy XXI (NASDAQ:EXXI), whose bond offering eight months ago enjoyed so much demand that it more than doubled the size of the offering, but the debt is now trading for less than $0.50 on the dollar and its stock has declined 88%.
- EXXI’s second-largest reported shareholder is a group of funds managed by Vanguard, and the top reported owner of the bonds EXXI issued in May is Franklin Templeton; the stocks of three banks that extended a $1.5B credit line to EXXI - Zions (NASDAQ:ZION), Comerica (NYSE:CMA) and Hancock (NASDAQ:HBHC) - are down 10%-15% this month.
Tue, Jan. 27, 2:40 PM
Fri, Jan. 16, 6:52 AM
Thu, Jan. 15, 5:30 PM
Tue, Jan. 13, 9:47 AM
- Dallas-based Comerica (CMA +1.9%) has been punished of late thanks to its exposure to the struggling energy sector, as well as its "asset sensitivity" - i.e., the idea earnings could be constrained by low interest rates more than some peers.
- The stock is lower by nearly 20% since mid-September, and Baird has seen enough and upgrades from Underperform to Neutral.
Mon, Jan. 5, 1:25 PM
- "We view Wells Fargo (WFC -2.7%) as a core bank holding, but shares have reached our price target and we believe sentiment is now overwhelmingly positive after leading returns in 2014 (+21%, #1 among the top 50 banks)," says Baird's David George, who earlier downgraded the stock from Outperform to Neutral.
- Put the money in another bank? Not so quick, says George, suggesting the Fed could tighten later and be less aggressive than most expect, disappointing those hoping for higher rates to boost profits. Other than Wells Fargo, George sees sentiment highest in PNC Financial (PNC -2.7%), SunTrust (STI -3.9%), and U.S. Bancorp (USB -2.2%).
- Asset-sensitive names like Comerica (CMA -3.7%) and Zions (ZION -3.4%) lagged in 2014, but estimates still look to high.
- Top ideas would be Fifth Third (FITB -2.7%), Capital One (COF -2.4%), and JPMorgan (JPM -3%), but George is having a tough time finding value in the sector.
- Previously: Longtime Wells Fargo bull rings the register (Jan. 5)
Dec. 8, 2014, 1:17 PM
- Dallas-based Comerica (CMA -1.3%) is an outlier to the downside among the regional names as oil tumbles another 3.7% to the lowest level since the summer of 2009.
- Other lenders with sizable Texas-operations and exposure to energy credit: MidSouth Bancorp (MSL +0.9%), BOK Financial (BOKF -0.6%), Cullen/Frost (CFR -1.5%), Hancock Holding (HBHC -0.9%), Green Bancorp (GNBC -0.7%), ViewPoint Financial (VPFG -0.5%), Iberiabank (IBKC +0.1%), National Bank Holdings (NBHC +0.1%), Texas Capital (TCBI -1.3%), Prosperity Bancshares (PB -0.8%), Independent Bank Group (IBTX -1%), Hilltop Holdings (HTH -0.7%), First Interstate BancSystem (FIBK +0.4%), First Financial Bankshares (FFIN -0.8%)
Dec. 3, 2014, 11:51 AM
- Philip van Doorn puts together a list of 15 lenders with sizable Texas operations, ranked by their exposure to energy credit as a percent of total loans:
- MidSouth Bancorp (NYSE:MSL), BOK Financial (NASDAQ:BOKF), Cullen/Frost (NYSE:CFR), Hancock Holding (NASDAQ:HBHC), Green Bancorp (NASDAQ:GNBC), ViewPoint Financial (NASDAQ:VPFG), Iberiabank (NASDAQ:IBKC), National Bank Holdings (NYSE:NBHC), Texas Capital Bancshares (NASDAQ:TCBI), Prosperity Bancshares (NYSE:PB), Comerica (NYSE:CMA), Independent Bank Group (NASDAQ:IBTX), Hilltop Holdings (NYSE:HTH), First Interstate BancSystem (NASDAQ:FIBK), First Financial Bankshares (NASDAQ:FFIN).
- All are lower over the last month, and Sterne Agee's Brett Rabatin calls it an overreaction in at least a few cases. While the decline in oil prices will slow lending growth, it would take oil at $60 or lower for a year before credit issues might arise, giving the banks plenty of time to build reserves. He's got Buy ratings on CMA, HTH, IBTX, MSL, and PB.
Nov. 11, 2014, 1:48 PM
Nov. 7, 2014, 3:19 PM
- Banks with as little as $50B in assets are currently subject to the Fed's CCAR - fairly absurd as there's roughly zero systemic risk from the failure of a bank with $50B in assets (or even $100B). While health, immigration, and tax reform in D.C. are getting a lot of headlines, banking industry reform may also now be on the way.
- A KBW report finds banks with between $50B and $100B in assets have been limited to a dividend payout ratio of 40% or less, compared to ratios far higher for those lenders with less than $50B. The $50B line is front and center for New York Community Bancorp (NYSE:NYCB) - which currently has $48.7B in assets and a 93% dividend payout ratio. CEO Joseph Ficalora would like to get back to doing acquisitions, but knows the bank can kiss that high payout goodbye if it does so under the current regulatory regime.
- Should a Republican-led Congress push to boost the threshold to, say, $100M, it would find a friend in the Fed's Daniel Tarullo who has already mused about doing so. "I would not expect President Obama to exercise veto power over this," says a financial services attorney.
- Among the players with $50B-$100B in assets: HBAN, KEY, MTB, ZION, CMA.
- ETFs: KRE, KBE, IAT, KBWB, RKH, QABA, KRU, KBWR, KRS
Oct. 20, 2014, 9:48 AM
- Nomura and Bernstein ring the register on their Sell/Underperform calls, upgrading Comerica (CMA +1.8%) to Neutral/Market Perform, and Sandler O'Neill upgrades to a Buy.
- The stock slid on Friday after earnings fell short of expectations, and one issue on the conference call (transcript) was the bank's large exposure to Texas and thus recently slumping energy prices.
- "We are not concerned at this time," says Chief Credit Officer John Killian. "We’ve been in this business for 30 years so we have seen lots of ups and downs." He notes the energy portfolio accounts for about 7% of loans outstanding. "Most of our customers are well hedged on average 50% are hedged for two full years and many are for longer periods."
Oct. 17, 2014, 9:57 AM
- EPS of $0.82 vs. $0.78 in Q2. 3Q14 EPS reflects net benefit of $15M or $0.03/share after tax on certain items.
- Recent dividend of $0.20
- Net interest spread of 254 bps down from 265 bps in Q2.
- Average total loans up 7% y/y to $47.2B
- Tier I common capital ratio of 10.69% vs. 10.5% in 2Q
- Repurchased approx. 1.2M shares during 3Q14
- Conference call. Webcast here.
- CMA -2.1%
- Previously: Comerica misses by $0.01, misses on revenue
Oct. 17, 2014, 6:49 AM
Oct. 16, 2014, 5:30 PM
Jul. 18, 2014, 6:48 PM
- The big banks aren't quite ready to let go of their reserve releases: The big four - JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - released a combined $2.25B of their bad-loan reserves in Q2, up nearly 20% from the $1.88B they released in Q1.
- The banks continue to see improvement in their customers’ credit quality, but their earnings continue to rely in part on freeing up some of their rainy-day cushions, rather than being able to generate strong earnings from their operating businesses.
- Even with the Q2 uptick, the banks are releasing less in the way of reserves than they have for most of the past four years, and analysts see the practice ending before too much longer.
- Some regional banks such as Comerica (NYSE:CMA) and Huntington Bancshares (NASDAQ:HBAN) that had been releasing reserves started building their reserves up again by small amounts during Q2.
Jul. 16, 2014, 8:16 AM| Comment!
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